Rackspace president seeks focus in a frenzied cloud market

The American phrase “stuck between a rack and a hard place” was coined to describe a tough dilemma where both options are uninviting. It has its origins, perhaps, in a dispute in Bisbee, Arizona where copper miners unionised but were left with a choice of deportation or staying on a tough job for not much money.

The situation that the new president of Rackspace finds himself in is, thankfully, not quite so brutal but Jeff Cotten can certainly look left, right, up and down, and find significant obstacles in all directions.

Cotten, an eight-year veteran of the company, became Rackspace president at the beginning of February and he takes up his new role at an interesting time as infrastructure giants such as Dell, HPE, Amazon Web Services, Microsoft, Google and IBM flex their considerable biceps. Some of these (most notably AWS and Microsoft) have become more partners than rivals, but there’s no doubt that they make standing out from the crowd a tough gig.

“I acknowledge it’s a very competitive market,” Cotton tells me over the phone. “We defined managed hosting and we were the disruptor, disrupting the old outsourcing companies, and it was a great place to be. The fundamental decision to build our own cloud was phase two and we were disrupted in the public cloud era.”

That honesty and clear-sightedness will be needed by Cotten and his fellow ‘Rackers’, as insiders describe themselves, as the company continues to reconfigure as a managed cloud provider after its $4.3bn acquisition last summer by private-equity firm Apollo Global Management that took the company off the public markets.

But it will also need aces in the hole and Cotten might have as many as three.

The first of these is customer service and Rackspace has a fine name here. I spoke to four customers for this article, all of whom agreed that the company outperforms when it comes to keeping customers happy. “They call it ‘Fanatical Support’ and it really is,” said one, referencing the company’s branding for its service offering. “They bend over backwards.”

“It’s all about service,” Cotten says. “To go deep on AWS, Azure and OpenStack is very difficult. We really need to up our game in our consultative sales approach and the bottom line for us is in a customer’s pain today, their financial and economic goals. There are real advantages of going private and one of them is to serve the needs of customers and their demands.”

Another route is to target international growth. Cotten was born in Dallas and previously worked at Plano-based EDS before joining San Antonio-headquartered Rackspace to complete a Texan trifecta. But he also has experience beyond the Lone Star state, having led Rackspace’s international expansion from Zurich, Switzerland and London where he picked up a smattering of Cockney vocabulary to go with his native drawl.

Cotten talks with enthusiasm about the opportunity to target and build facilities for the large and unique German market with its demands for local datacentres, and for other target areas in the DACH and beyond into broader Europe.

A third plan is to focus on applications such as e-commerce and content management on core cloud platforms to drive more of the $100,000-plus deals that grew by about a third in the last 12 months.

“I was a CompSci at university and developed apps business people are looking for, and I know how to talk to those buyers,” he says. “We’re not trying to get too broad but we can move up to applications with e-commerce and content management, but in 2017 we will go further up the IT stack.”

He won’t say where exactly, although he concedes that SAP on AWS “is very eye-opening”.

Before, Cotten hints, Rackspace might have had too many offerings but he sees the opportunity to concentrate on the big managed cloud opportunities on VMware, OpenStack and Azure. As an example of that concentration he says there are no plans for managed services on the Google Cloud.

“It’s about focus,” he says. “There’s no Google offer and that’s a focusing decision. [We’re focused on questions such as] how do you scale an application in the cloud, how do you make it resilient. It’s out chance to be disruptive again.”